On the Proposed City of St. George
These are unusual times. The number of contentious issues at the national and state level can seem overwhelming. We may feel like those issues require our full attention. However, for those of us in District 12 and in East Baton Rouge Parish, there is one issue that we must not overlook: the proposed City of St. George.
Its fate is not assured, but regardless of the outcome—whether or not it is approved by the courts—we must contend with the issues the proposed city exposed, and if created, the issues it will exacerbate. And we must do everything in our power to ensure that if the new city is incorporated, then the negotiated settlement between it and the City-Parish is equitable and just.
The proposed City of St. George will cause economic harm to the people in District 12 as it will to the parish as a whole, including to those who live within the limits of the proposed city.
In their proposal, the Committee for the Incorporation of St. George openly states their conclusions in support of the proposed city are based on a number of “Significant Assumptions.” Most of these assumptions are faulty and unreasonable. Their most unreasonable assumption is that the new city will not be required to compensate the City-Parish for the fair market value of the infrastructure the City-Parish as a whole paid for.
St. George residents did not build the original infrastructure that allowed for the population growth in that area. The City-Parish did. And it’s important to know the history behind the City-Parish’s decision to invest in that infrastructure.
Originally city revenue could only be spent developing infrastructure within city limits. But in the late 80s, there was an amendment to the Plan of Government, and in the early 90s, the Metro Council adopted the Horizon Plan. In conjunction, these two policies allowed city revenue to be spent in the unincorporated area without requiring the area to be annexed into the city limits. At the time, the unincorporated area now known as St. George was undeveloped and sparsely populated. But the investment of city revenue spurred the growth of the major retail hubs and population growth followed.
St. George organizers are now proposing to walk away with the infrastructure without compensating the City-Parish for it.
Here’s an analogy: Let’s imagine that a person decides to invest in a rental property. The investor makes a down payment, takes out a mortgage, builds the home, and leases it to a tenant. Now imagine after a few years, the tenant decides, I like this house. I’m going to draw a line around the property and incorporate it and declare it mine.
The investor would likely ask, Are you going to pay me the fair market value? It has appreciated over the years. It’s worth $300,000 now. Are you going to pay me $300,000?
Imagine the tenant saying, No.
So the investor asks, Are you going to pay me what it was worth when I built it? Are you going to pay me $100,000?
And the tenant says, No.
What about my initial investment, asks the investor. I invested $50,000. Are you going to pay me $50,000?
No, says the tenant.
And the investor asks, What about the mortgage?
And the tenant says, That’s your mortgage. That’s not my responsibility.
Reasonable people recognize the tenant’s proposal would cause the investor economic harm. This is fundamentally the proposal being made by the organizers of St. George. It’s obvious it would cause the City of Baton Rouge and the remainder of the parish economic harm. It’s not the only economic harm, but the harm is undeniable and should be sufficient grounds for prohibiting the incorporation of the new city.
Louisiana law prohibits a new city from causing economic harm to any other municipality or city-parish resident and requires cities to provide certain services to its residents. According to their own proposal, the City of St. George cannot afford to do both. Their ability to provide the city services to their residents is dependent upon their ability to cause the City of Baton Rouge and the remainder of the Parish economic harm.
The plaintiffs who filed suit against the proposed city’s incorporation were right to do so. Hopefully, the court will rule in their favor. If it does not, then we must fight for a negotiated settlement that mitigates the economic harm it will cause to the people in the rest of the parish and in District 12. We must demand they pay the fair market value for the infrastructure as well as their fair share of legacy costs and bonded indebtedness. I commit to that fight.
RISK TO CITIZENS IN PROPOSED CITY
In District 12, there is one precinct—Ward 3, Precinct 23—which is included in the boundaries of the City of St. George. It is worth noting that a majority in this precinct opposed the creation of the new city, but will nonetheless be forced to become a part of St. George if it is incorporated. I am also concerned for their well-being as I am for all who would become a part of St. George.
St. George doesn’t just threaten to cause economic harm to the rest of the parish. For a myriad of reasons, it will put its own citizens at great risk. One of the greatest risks is the proposed city’s significant dependence on sales tax revenue, which is regressive and volatile, an undesirable combination for the average citizen.
Sales taxes are regressive because they fall more heavily on the average citizens while allowing the very wealthy to reduce their tax “liability.” Sales taxes are volatile because they fluctuate dramatically in response to downturns in the economy, like we’re seeing during this pandemic. And they are also volatile because they are subject to changing retail patterns. There is no guarantee that the area—whether it is the City of St. George or the unincorporated area of East Baton Rouge parish—will continue to generate the amount of sales tax revenue projected in their budget. Moreover, if created, St. George will be competing for sales tax revenue with surrounding parishes and the City of Baton Rouge as well as online retailers. It is not considered a stable source of funding.
This is why relying heavily on sales tax revenue is not considered a good practice for municipalities. Few cities, even the one held up as a model by St. George, rely heavily on sales taxes for their revenue. Portland, Oregon relies on no sales tax revenue. Less than 23% of Austin’s budget consists of sales tax revenue. In New Orleans, only 33%. In Sandy Springs, which St. George proponents claim is their model, only 26% of its budget consists of sales tax revenue. Based on the information provided in the Committee for the Incorporation of St. George’s proposal, the new city’s budget relies disproportionately on sales tax revenue. (Of the revenue identified in their proposal, 91% consists of sales taxes.) This is not a sound proposal. It puts its own citizens at risk.
If the new city is incorporated, I cannot advocate on behalf of St. George residents. However, I commit to raising awareness about the dangers this new city poses to the entire parish and to those who live within its limits.